Two Tests To Pass For Tech Success

Two Tests to Pass for Tech Success

Technology markets are fast moving and apparently unpredictable. A key factor in the volatility is the tension between the focus of the technology supplier and the user.

Users (individuals and enterprises) have simple underlying aspirations, such as making more money, reducing financial exposure (spend), having more leisure time, or improved social connection. The appeal of a technology solution is proportional to how effectively it delivers against those aspirations. However, suppliers are generally more committed to a specific technology approach based on their investment and capabilities.

-Users are technology agnostic. They don’t care how things work, only that they are useful and affordable. An apparent technology preference really results from what the user believes will deliver the best and most reliable benefits in supporting their underlying aspiration.

-Technology suppliers have invested in their own solutions, so it is understandable that they will champion their offerings and approach and promote the unique features that differentiate them from the competition. Where such promotion resonates with user requirements for reliable delivery against underlying aspirations, it can appear the technology is a critical USP, but even then, it’s what it does rather than what it is that users buy.

Complexity, disruption, rapid growth, and arbitrary collapses all feature in technology markets as a result. The industry focus on technologies and features, rather than what users want to achieve, leaves suppliers vulnerable to disruption by alternative approaches or sudden collapses in demand as apparently unrelated developments replace a previous solution. The answer for suppliers is to relate the solution on offer to achievement of underlying user aspirations, while also making the solution the easiest and most obvious way to be successful. To do this well, a technology supplier needs to pass two tests and then use the results to refine its approach to market.

The two tests are:

– The Time Machine Test;

– The Total Cost of Transaction Test.

Technology Time Machine (TTM)

We all live increasingly congested lives, where tasks are unevenly distributed, so we have quiet times and times where there is more to do than can be accomplished. Technology has enabled the resulting congestion to reach into all parts of our lives.

– Mobile phones, laptops, email and social networks mean that we have largely lost the distinction between personal and work time.

– The new communications and process technologies improve our productivity potential and market competition means that, rather than translating into reduction in personal pressure, savings are co-opted by work (employers or customers).

An effective time machine can take things to do from now into the future, or bring things from the future and accomplish them when we have time in the present. While not giving us more personal time, this achieves the most personal benefit in terms of reducing stress, by lowering the peaks of our congested lives. Dealing with an email in-box or reading briefing reports while traveling on public transport, for example, can reduce anticipated congestion at the end of the journey. Viewing streamed content at a more convenient (later) time reduces congestion in the present.

Looking at historical cases, it emerges that the ability to de-congest is more important to technology market success than user interfaces, peer recognition (status), price or clever promotion.

-The innovative ability of the VCR to shift TV viewing to more convenient times (from the present into the future) and the mobile phone to enable us to deal with future communication needs now (from the future into the present) made these technologies incredibly successful in their day, despite having truly abysmal user interfaces and being relatively expensive.

In today’s environment, social networks enable us to interact with a wide range of contacts that it would otherwise take much more effort to maintain, and this is so valuable we put up with a massive amount of intrusive advertising and exposure to scams and negative contact. Smart home AI speaker devices provide us with access to music and other content, integration of our home devices and other functionality that decongests us to the extent that we purchase the functionality even though we are sure it is collecting information and selling it to companies that waste our time with promotional messages.

Better time machines keep us sane and allow us to maintain space for activities we want to pursue (hobbies and interests), and we will put up with a lot to gain that benefit, but time machine effects that benefit others at our own expense have little appeal.

-CRM systems, for example can increase congestion for sales staff (more data to record and input and actions to devise, record, monitor and execute) while the benefits of the system accrue to management (better understanding of pipeline, improved forecasting and responses to emerging trends).

-The hardest part of implementing CRM is often getting front-line sales staff to commit to providing the effort required to make them useful.

Total Cost of Transaction (TCT)

It is too simplistic to believe consumers consider only the price of a product or service when comparing alternative solutions. Aside from the benefits sought and external influences, there are four key cost elements that influence purchasing decisions.

Price, threshold factors, effort and risk, considered together, make up the Total Cost of Transaction (TCT):

  • The actual price paid remains an important component in purchase decisions, but it is generally considered alongside other elements.
  • Threshold factors are important. These include the level of knowledge required, whether the transaction requires an existing platform (i.e. the purchase is an add-on) and prior commercial requirements to qualify for eligibility.
  • How much (physical or mental) work is involved in successfully completing the transaction is also a key consideration.
  • Risk factors, including direct risk (i.e. the risk of not receiving the product or service purchased) and contingent risk (i.e. the damage that might be caused if the product or service does not work as expected) are also critical decision influencers.

It follows that having the lowest price for a product or service does not necessarily equate to the lowest TCT. If you already need expertise to utilise the offering, or it is perceived as riskier, this can easily outweigh the monetary saving. The failure of early Internet-based ecommerce models can be attributed largely to a lack of understanding of how the different elements of TCT influenced overall purchase decision making.

The weight given to the elements will also vary by case, often depending on personal preferences and importance of contingent risk factors.

  • Consumers may apply a great deal of weight to the safety record of an airline when making a ticket purchase decision, but the risk of a gastric upset from buying street food while on holiday might be less likely to prevent a purchase.

The TCT model allows suppliers of technology services and products to gain a better insight into where their offerings fit into the market and how best to improve uptake and margin.

Using the Tests for Market Success

To benefit from testing your offering, it is essential to adopt the customer perspective and, ironically, to be technology agnostic.

  • Users do not care what technology supports their activities (except insofar as it promotes their image with peers) – they want to achieve life goals and remove congestion, so they will be drawn to solutions that are best at helping them.
  • Life goals may include making more money, reducing the stress of supporting customers, having more free time. They are rarely technology specific.

Firstly, consider the efficacy of your time machine.

  • How well does your time machine align with customer aspirations? Does using your solution help the user personally to reduce congestion in their own life? Not considering overall benefit to the company or others, you need to understand how the solution benefits the user selfishly, rather than a wider group altruistically.
  • Does your solution do a better job of congestion reduction than other solutions, not just competing technologies? If the user can employ someone else to carry out a manual process, or remove the need to carry out the congesting tasks at all by altering operational procedures, these will compete directly with your technology solution.

Once you have assessed your time machine credentials, you need to consider how easy it is to do business with you by examining your TCT.

  • Again, you are focusing on the personal experience of the user, rather than wider corporate or societal benefits. If users want your solution, they will do the work involved in justifying it through corporate process. If they don’t want it, they will find reasons to resist using it, even if their employer wants them to.

-As with the time machine assessment, the competition is not just from players in the same technology space, the TCT should be compared with achieving similar results in a completely different way, including manual processes and sub-contracting.

-A clear understanding of all the TCT elements will usually indicate priority areas to be addressed in achieving an overall reduction leading to improved market performance.

Beyond the Tests

Once you know you have a good time machine and a relatively low TCT, you can confidently engage current and potential customers to generate business growth and customer loyalty.

-Your time machine capability will attract customers to examine your offer and a low TCT will help them make positive buying decisions.

Once on board, continued attention to the tests and a high level of engagement can be used to achieve a level of true loyalty where customers do not even consider alternatives when purchasing more, renewing, or should they experience a problem.

-The engagement needs to be welcomed by the customer (rather than seen as a series of intrusions).

-Alignment of values and a feeling that they are appreciated is essential for customers to feel emotionally engaged.

-Customer facing resources (including, but not limited to, loyalty programmes, call centres, support services and product design and marketing departments) must put customer life aspirations first (improving time machine effects and reducing TCT).

The graphic below (from Mobile Market Development) illustrates how TCT and positive engagement can build true loyalty in your time machine customers.

Next Steps

GJC Advisory offers a series of tools and workshops that can help you to assess current performance and future potential in all these areas. If you take advantage of this support, you will be able to ensure your development roadmap strengthens your competitiveness, not just against peer products and services, but also against out-of-sector competition, and also that you maximise both returns and enterprise value now and in the future. Contact us to learn more

GJC Advisory

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